ICHI Docs v3
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ICHI Overview
Branded Dollars
Multichain
Branded Dollar FAQs
How is it possible to mint a new ICHI Branded Dollar for $1 of value?
Decentralized oracles (live price feeds provided by networks of computers) determine the price of two assets in US dollars: $USDC (a stabletoken issued by regulated financial institutions, backed by fully reserved assets, and redeemable on a 1:1 basis for US dollars) and the project tokens. You mint a new stable token by paying exactly 1 US dollar in two parts (part $USDC and part project tokens) as calculated by these oracles.
How is it possible to redeem a Branded Dollar for $1 of value?
You redeem a stable token for exactly 1 US dollar of $USDC, less a redemption fee. The price of $USDC in US dollars is provided by decentralized oracles.
Why can't you just use the cryptocurrency (ie, Bitcoin) to do business activity? You can't grow a business without the ability to predictably pay expenses, control risk, and/or set aside funds for taxes. That makes volatile, scarce tokens unusable for real business. At the same time, it hurts every time you sell a token for fiat currencies (money issued by governments rather than software) or stable tokens don't economically drive the value of that token's treasury. ICHI makes it possible to community hodl (hold your tokens rather than selling them) your favorite token while also doing real business.
How do branded dollars hold their peg?
ICHI takes specific measures to ensure that there is always enough fiat backed stable asset backing the branded dollar so that it can be redeemed for that asset. Today, that means USDC (which is the only fiat-backed asset in collateral for the 11 branded dollars we have). With that risk parameter in place, branded dollar users will always be able to redeem 1 branded dollar for 1 USDC. This ensures that the branded dollar is always worth $1 and provide an arbitrage opportunity for arbitragers in the space in case that begins to fluctuate.
What does 100% on-chain mean?
You can see the $USDC collateral and the tokens paid to mint on the Ethereum blockchain as well as the entire transaction history of minting, redeeming, and any treasury actions. If the tokens or $USDC are used by the token’s community to create DeFi (decentralized finance positions), you can see these transactions and positions in the corresponding smart contracts.
What is the Community Treasury?
You pay in project tokens to mint that project’s Branded Dollar. These tokens remain in a Community Treasury because you only get back $USDC when you redeem the token’s Branded Dollars. The Branded Dollar’s community decides what to do with this treasury by voting with the stabletoken itself. A common action may include selling part of the Community Treasury to buy more $USDC and deposit it back into $USDC collateral.
How does a community profit from a Branded Dollar?
Communities that create their own Branded Dollar are able to introduce a stable medium of exchange for their economy without having to dispose of their native project tokens.
DMAs enable communities to:
- Create their own decentralized stable token
- Create a Community Treasury to incentivize adoption
- Earn yield on their own stable token
- Increase total value locked in their community
Where can I use these Branded Dollars to do business? Why would anyone accept them?
- There are three major markets for stable tokens: decentralized applications (DeFi), cryptocurrency applications (centralized exchanges, wallets, etc), and consumer applications (online shopping, everyday goods and services).
- Users will mint the first $10B stable tokens for DeFi, the next $100B for cryptocurrency applications, and trillions for consumer applications. This will take time but the Community Treasuries are able to power the incentives and discounts necessary to make this happen.
What happens if the scarce crypto goes down in value?
ICHI requires a minimum treasury reserve ratio of 150% in order to ensure 100% of Branded Dollar redemption at $1. Decreases in scarce crypto value which put this ratio at risk should result in purchasing of additional collateral tokens or unwinding of yield bearing positions.
What does an infinity symbol in the Reserve Ratio column mean?
This can mean one of two things:
- 1.Reserve Ratio is above 10,000%
- 2.All outstanding Branded Dollars in circulation are backed by hard-pegged stable assets (i.e. $USDC)
How is the Reserve Ratio calculated?
Two simple steps:
- 1.Treasury Backed = Minted - (collateral + collateral position) - (Minted * Redemption Fee)
- 2.Reserve Ratio = (Treasury + Treasury Positions) / Treasury Backed
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